Highlights

• Engineered a substantial increase in value during a six year holding period
• Orchestrated a significant property improvement and re-tenanting campaign, bringing the center from 40 percent to 95 percent leased.
• Provided investors with above market returns in each of the six years the property was held.

Synopsis

Through a carefully engineered and executed retail center modernization, marketing and re-tenanting program, JCF Real Estate added considerable value to Ridge Plaza, a 240,000-square-foot retail center located at Dundee Road and Route 53 in Arlington Heights. The program culminated with the expansion of Kohl's space and addition of two new tenants — Xsport Fitness Center and Bang & Olufsen's — totaling approximately 72,400 square feet of space.

Panorama of Ridge Plaza

Bang & Olufsen building

Detailed Situation/Description:

JCF Real Estate purchased Ridge Plaza in Arlington Heights in 2000. The Center is a 240,000 square foot property, including 90,000 square feet of shadow space owned and occupied by Kohl's. At the time of acquisition, Ridge Plaza was approximately 40 percent occupied with the recent departure of a Loew's movie theater. Further, Kohl's was evaluating its position in the marketplace.

Strategy:

Acquired as a value-added retail opportunity, JCF's intent was to orchestrate an extensive center modernization program, demonstrating its commitment to the center as well as current and prospective tenants. JCF would leverage its financial commitment and its ability to be both creative and flexible to bring new life to the center.

Solution:

Substantial capital was invested into the center, creating an upgraded and vibrant feel through a new façade and new signage, among other additions. Simultaneous to this modernization program, JCF embarked on an aggressive marketing and negotiations program resulting in:

• Kohl's expanding its operations to 90,000 square feet by adding approximately 30,000 square feet (including 10,000 square feet owned by JCF);
• The approximately 40,000 square feet previously occupied by Loew's was specifically targeted to health clubs, which would require only minimal redevelopment dollars. A lease was signed with XSport Fitness Center, the second-largest Chicagoland fitness center chain;
• An out lot building, not conducive to traditional retail users, was marketed as potential office space and ultimately was leased to Bang & Olufsen's as its North American Headquarters.

Results:

Following the completion of these activities, occupancy was increased to approximately 95 percent, cash flow from operations was substantially and positively impacted and, upon the sale of the center in early 2007, investors were rewarded with tremendous sale proceeds.